Empower Your Business

Accounting is Just the Beginning

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5 reasons accountants make great business owners

I have made a career out of helping accountants run better businesses themselves and then helping their clients run better businesses.

In working with those accountants, I’ve observed that many of them suffer from confidence and self esteem issues and tend to forget that they themselves are running a business. Strange as it seems, I have heard of accountants who pack up their bags and go home with their tails between their legs when a client challenges them by asking ‘what would you know about running a business?’ Once we work through those issues, however, there are five very good reasons why accountants make great small business owners and why their clients should listen to them to improve their own businesses.

  1. They not only run their own businesses, but they are dealing with business owners every day
  2. They understand the numbers
  3. They understand the difference between profit and cash flow
  4. They are well educated
  5. They are well respected and trusted

Click here to read more detail on the five reasons.

By Colin Dunn.

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7 Reasons to Trade as a Limited Company

7 reasons to trade as a limited companyIt costs a few hundred dollars to form a limited company but despite that, many thousands of Kiwi’s continue to start businesses as sole traders or even worse, partnerships. In more than 30 years of looking after small businesses I’ve seen so many unfortunate and unnecessary situations and countless examples continue to crop up, so here are a few I’ve seen in the last year or so.

 1.    Outstanding GST. It’s a fact that the IRD in NZ are rubbish at collecting tax, so much so that many business owners use the IRD as a source of finance. Take a new client of mine in Hawkes Bay, a husband and wife partnership who now owe $85,000 in GST. Their business is failing but guess what – as a partnership they are fully liable personally for ALL the GST. If they were a limited company they could have walked away. Bankruptcy and ruin beckon……………

 2.    Accounts Receivable. Another husband and wife partnership client has received a demand for $175,000 from the liquidator of one of their former customers, who says they have to repay the money they legitimately received for sales made. Ridiculous maybe, but as a partnership they are fully liable and needless to say, they haven’t got $175,000 sitting around!

 3.    Legal Claim. Another client, a sole trader, was on the receiving end of a totally unexpected claim of $260,000, and guess what, his insurance company refused to pay up! Bye-bye house!

 4.   Partner’s Debt’s. Another client was in a two-man partnership. His business partner ran up debts willy-nilly and then cleared off. Guess who had to pick up the tab for the partner’s debts?

And it’s not just debt or financial ruin that makes a limited company so valuable:

 5.    SelfEmployed Status. We are very lucky in NZ. You can trade as a limited company yet still retain your self-employed status so it’s crazy not to take advantage of this.

 6.    Tax. Both sole traders and partnerships are pretty useless for income-splitting to minimise tax. A company, on the other hand, is far more flexible.

 7.    Ease of Ownership Transfer. It’s so much easier to transfer wealth or assets when you have a limited company. No legal fees or tax issues to worry about!

Business is risky, so why take any more risk than you need to? If you need help with your business contact Nick on 0800 ASK NICK or email nick@abac.co.nz.

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8 Free Marketing Strategies

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10 Minutes of your time to get 8 Free Marketing Strategies you can implement now.

What Marketing Strategies do you currently use?

What other Free Marketing Tools would you recommend?

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Simple Steps to Reduce Your Accountancy Fees

What accounting systems do you use now?

Any tips you would add?

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Top Tips For Business Growth

20 somethingIt’s easy to sit back and enjoy the fruits of your labour and become comfortable with your current business position.  But don’t become too comfortable.  Isn’t that why you got into business in the first place?  To step away from that zone and challenge your way of thinking?

Always be aware of and listen to your market.  It’s easier to swim with the current than against it so make sure you are offering a product or service that people are actually buying.  Do your research and find out about your target market, their needs and their wants then provide something that delivers on these.

Business growth will come by changing your mindset.  If the market is not doing well, don’t look at this and use it as an excuse for your business not to grow.  A positive attitude is the first step towards growth.  If you surrender to your current situation, you’re not going to grow.

When you think of growing your business, don’t let it stress you out.  Try to do just a little bit every day, not everything.  Make concise lists about what’s important and what steps you need to take to ensure these tasks are completed, before moving on to the next.  If you don’t complete them on time, don’t worry too much but try to set realistic timeframes where possible.  Try to be as motivated as possible.  Be aware of productivity killers such as procrastination and distraction.

Productivity Killers

One of the most important elements to business growth comes from managing productivity.  This can be done by being aware of your habits and making basic changes to the way you work.

The wrong mindset. We all know that attitude has a lot to do with our productivity.  By having a more positive outlook on the day or week ahead, your motivation will accelerate and lead to better productivity.

Distractions.  Some people go so far as to remove distractions such as social media from the workplace.  However it wouldn’t actually matter what you removed, there is always something to distract us from our work. Whether it is the view out the window, personal emails, a fly in the room or idle chatter with a colleague, these are all productivity killers.  What we need to do is be aware of these distractions and learn to work through them.

Lack of routine. Without structure, it’s easy to become lazy.  Set a regular pattern and stick to it each day, and not just in your work environment.

Awareness and little changes over time to some of these productivity killers will subconsciously improve your work ethic over time and help steer your business toward positive growth.

If you need help with your business growth contact Nick on 0800 ASK NICK or email nick@abac.co.nz.

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Twelve Ways a Company Director Can get a Criminal Record

I didnt knowCriminal prosecutions of failed finance company directors has been a useful reminder that being a company director (or a deemed director) can be very risky as well as being stressful and much hard work.

Most people would think of tax as a way a director could end up in jail or with a criminal prosecution but in fact, there are another eleven ways a director could get a criminal record:

  1. Acts without a resource consent when one is required or does not comply with an enforcement order, abatement notice or water shortage directive;
  2. Pollutes, unlawfully disposes of trade waste or leaks, spills or releases harmful substances; or engages in misleading, deceptive or unconscionable conduct;
  3. Makes false representation regarding products;
  4. Fails to provide a safe working environment that has adequate emergency procedures;
  5. Does not maintain an accurate record of accidents and fails to notify the proper authorities;
  6. Requires the giving of covenants that are designed to, or would be likely to, lessen competition;
  7. Attempts to fix a minimum price for resale by its customers;
  8. Supplies goods that do not comply with product safety and information standards;
  9. Accepts payment for goods where there are reasonable grounds to expect it will not be able to supply them;
  10. Manufactures, stores, supplies, transfers, sells or uses dangerous goods without a licence or other than in accordance with specified conditions; or
  11. Delays or fails to report an accident involving dangerous goods.

Directors have a duty (under law) of care to customers, suppliers and employees as well as the general public. Make sure you stay out of jail by taking the appropriate advice, doing your homework and knowing the law.

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Are Small Business Owners in Denial?

I met a business consultant contact the other day over a coffee. He was commenting that many business owners are in denial about just how badly they are doing in business: making small or no profits, working long hours with no systems, no marketing and generally not knowing whether they’re making or losing money – the list went on and on.

Are business captains hiding from facts?

Mentioning our conversation afterwards to an accountant friend, he didn’t feel that the business consultant was being totally fair to small business owners. “After all, he said, we’re still in the worst recession for 30 years, a lot of small business owners just have no resources left to utilise. The business scene is changing rapidly, marketing is a nightmare now with websites and social media. It’s hard to afford staff or to engage expert assistance anymore so business captains end up working 24/7 trying to do everything themselves. They’re skeptical about expensive business consultants in fear that they promise a lot but deliver little. In the end it’s all just so hard so they don’t know where to begin and therefore they don’t!

After that conversation, I thought, yes, there are two sides to every story. But who is right? What do you think? I’d love to hear your views, as I’m sure would others!

Answer the question on Facebook (not an app, we will not ask you to share your personal details):
https://www.facebook.com/nzbizpower

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Making Yourself Accountable in Order to Succeed

In my last post I talked about the lack of business skills often displayed by those owning and running small businesses. Although almost everyone seems to agree, very few seem to do something about it.

What would make it easier for business owners to take action? More time, more resources, or more of a willingness to embrace change? One sure fire thing that works is accountability to another, which is something one gets when working for someone else. Unfortunately, when you start your own business, you lose the benefit of accountability – as you only have yourself to answer to.

Accountability has been defined as ‘the obligation of an individual to account for his or her activities, accept responsibility for them, and to disclose the results in a transparent manner.’

There is nothing so motivating than knowing one is going to be embarrassed, be out on a limb or otherwise in trouble for not completing a task – business partners are good, spouses can be OK, even your kids can turn out to be good sounding boards, but the most efficient accountability tools of all in a business scenario are Business Mentors or Coaches. This is because:

  1. You are normally paying for their services and thus would be wasting your money if you didn’t do anything as a result
  2. They can look at your business objectively whereas you’re always plagued by some bias
  3. They are (should) be skilled in business and can therefore come up with ideas you didn’t have
  4. They can immediately see things you can’t, especially when what you’ve done is obviously flawed
  5. You can talk about your personal issues in complete confidentiality and let’s face it, personal issues are often very connected to business
  6. Very importantly, they can help you see the bigger picture, set goals and help you reach them, getting you away from the day-to-day minutiae – which is so vital if you want to get on.

So, if business coaches are so good, why aren’t they used by everyone?

  1. Bad eggs in the business have ruined the overall image of business mentors and coaches. Yes, there are a few, unfortunately but they can be avoided – ask around, start with the Chamber of Commerce.
  2. Lack of awareness of how useful the good ones are is another problem! Many business owners are reluctant to say that they get help from outside – slave to the ridiculous notion that we are supposed to possess all knowledge and experience from the word go.
  3. Business owners think that Business Mentors need to know their business intimately, which means that it will take too long or be too complicated to get them where they can be usefull. Although it is true that a good business coach will want to know your business well, such knowledge comes quickly to an experienced mentor.
  4. The perceived cost: A good mentor will bring about a return on investment much, much greater than the investment required in mentoring, which doesn’t have to be excessive. In fact it can be as little as $100 + GST per month.
  5. If things get too tough they don’t help you, just leave you to muddle on. Not so with a good, experienced mentor who will stick by you because they love the challenge (otherwise they wouldn’t be mentoring).

So if your business is drifting, finding it difficult to adapt to change quickly enough or just not performing give a try to the concept of accountability and see a brighter future open up before you.

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Self Employed Living in Misery?

One headline on our website’s News Feeds caught my eye recently. It read: Self-employed “living in misery”, followed by a categorical advice from Business Coach Daniel Batten to all employed people to keep their 9-to-5 jobs and never venture onto dangerous entrepreneurial grounds.

Was there some truth to the statement, I asked myself? Am I, or any of my clients, living in misery? Yes, business is hard work and it’s true that many who go into business are woefully ill-prepared (like the couple in Alexandra I met who had just bought a motel who only had a 30 minute hand-over from the previous owners). The education system is not good either at giving people the necessary business or finance skills (or any skills for that matter given the headline the previous weekend about 1 million Kiwi adults lacking essential literacy & numeracy skills!) Nevertheless, I wonder whether the author of this advice had ever worked for some of the small employers in Hawkes Bay. I myself had the unhappiest six months of my life working for a local employer and just couldn’t wait to leave. Many others I meet have been or are still in that same boat.

But hang on though, is there a connection here? Is the reason that so many small employers are so awful is that they are potentially living in misery too, equally ill-prepared to deal with the challenges of business and employing people? Surely, it can’t be a lack of common-sense, or a failure to understand that to get the best out of people you treat others as you would wish to be treated yourself (a principle which, if followed, would mean that we could scrap all Employment Legislation).

We do need people to go into business to keep the economy going (especially in NZ where 90% of businesses are small). In addition, people cannot expect to earn a lot working for someone else, in what is now regarded as a low-wage economy. Being in business is the only  practical path to freedom and being better off for many people, especially in a provincial area like Hawkes Bay, which lacks bigger companies and all the career potential they offer.

So what can be done for those who want to get on or are entrepreneurial, but who lack that so-useful family background in business? More training seems to be the obvious answer. Unfortunately, the poor attendance of the NZTE subsidized business training programmes showed that they were not valued and, maybe for being free, taken for granted. Too many people would show up late and clear off early when showing up at all. Likewise, the educational seminars previously organised by the Chamber of Commerce have ceased, presumably through lack of interest. I am not sure whether the private training providers and business coaches are any better utilised. Maybe business owners are themselves the problem: unwilling or unable to see the need to acquire better business skills. I often encounter in my practice a “she’ll be right” attitude, the belief that issues can just be muddled through.

Maybe we should require budding entrepreneurs to get a licence to go into business. After all, in many trades or professions you need one (although of course they don’t test acumen or knowledge in the more important areas like finance or marketing!) An interesting proposition, although one could argue that such a requirement would end up putting unfair barriers in the way of the ambitious. Some very successful businessmen, I am told, could neither read nor write – although if you know of any please send in their names, as I have failed to find any examples myself.
More franchises could be another solution, as they provide the business owners with ready-built systems and a proven business model. For some maybe, with the right franchise, but not all: a lot of franchisees end up resenting the lack of freedom and rigidity of the structure they have bought into. Not to mention that some franchises could be a waste of money, as they do not actually represent any known brand, which means that franchisees end up paying a lot for not very much.

How about more government intervention or subsidies, like the previous NZTE business development grants or the up-coming voucher scheme? I will be interested to see whether the latter will prove any more popular than the grants. The risk with such programs, of course, is that the availability of taxpayer’s money sometimes only encourages petty fraud and an unrealistic attitudes.

Of course, one could argue that this just the way the free-market works: the survival of the fittest means that those ‘living in misery’ deserve to suffer as a punishment for their lack of planning, foresight and common sense. They will more likely give up in the end, leaving space to the more acute, skilled (or lucky) businessmen.
What’s your view? If you’re self-employed, are you living in misery, do you know someone who is, or was Daniel Batten just trying to drum up business for himself?

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Self-employed “living in misery” Published: 12:41PM Thursday July 15, 2010 Source: ONE News